Asian Markets Lower; ECB Meeting Eyed

04 Sep 2012

-- Asian markets lower ahead of ECB meeting. -- Nikkei down 0.4%, Hang Seng Index down 0.3%, S&P ASX 200 slips 0.7%. -- Sharp bounces back 10.2% on deal development. (Updates market levels) By Daniel Inman Asian markets were lower Tuesday, ahead of a key European Central Bank policy meeting on Thursday. With U.S. markets closed for the Labor Day public holiday Monday, the focus was on Europe where European Central Bank President Mario Draghi said that the central bank was open to buying government bonds with maturities of three years or less. The comments raised already high hopes for the ECB policy meeting on Thursday, where markets expect Mr. Draghi to provide more details on how he will bring down the funding costs of euro zone countries like Greece and Portugal. "The only question is whether or not it will print more money between now and November," said Nicholas Smith, equity strategist at CLSA in Tokyo. The euro was at $1.2615 Tuesday, adding to the two-month high that it reached overnight. The dollar gained back some ground against the yen Tuesday, at Y78.34 compared to Y78.26 late on Monday. Although the dollar pushed back during the session, the Nikkei was off 0.4%, weighed by the strength of the local currency. Index heavyweights Softbank and Kyocera were down 3.0% and 0.6% respectively, offsetting companies with a European exposure, which were helped by the stronger euro - such as Canon, which added 0.2%. Australia's S&P ASX 200 was off 0.7%, amid weakness in banking stocks that was offset by gains in the mining sector, ahead of the Reserve Bank of Australia's policy meeting later in the day. Although a cut in interest rates is not expected, the local market could get a boost if the central bank acknowledges the recent weak economic data from China. Monday, HSBC's China Purchasing Managers' Index fell to its lowest level since March 2009 in August, while China's official manufacturing PMI, released on Saturday, slumped to a nine-month low and was below 50 for the first time since November. In China, the Hang Seng Index was down 0.3%, while the Shanghai Composite was down 0.4%. South Korea's Kospi was 0.2% lower, with index heavyweight Samsung Electronics flat. Gold continued to climb in Asia, rising $2.10 to $1694.70 a troy ounce, as expectations for more quantitative easing sent investors to buy the precious metal. Oil also continued its long recovery - at $97.19 a barrel compared $88.06 at the end of July. In company news, Sharp shares bounced up 10.2% in Tokyo, after falling 19% over the last three sessions, after a media report in Taiwan said that Hon Hai Precision Industry's chairman Terry Gou said he was definitely going to get involved in the management of Sharp. Both Aluminum Corp. of China, also known as Chalco, and SouthGobi Resources moved in Hong Kong on news that the Chinese metals giant had ended its bid to acquire the Mongolia-focused coal miner. Chalco was up 1.0% and SouthGobi was down 2.3%.